Use The Same Techniques The Rich And Famous To Avoid Taxes!

You've probably read in the newspapers of various celebrities and successful business who manage to avoid or at least substantially reduce their UK taxes – whilst a significant proportion of the general public are paying close to 50% of their income in tax. Well, there's nothing to prevent you using some of these techniques to slash your UK taxes as well, depending on your circumstances.

Here's some of the techniques that the Rich & famous use:

Make the most of your offshore status
People like Mohammad al Fayed make tremendous use of their non UK domiciled status. If you're an overseas national and were born overseas (typically your father will also have been a non UK domiciliary at the date of your birth) you can avoid paying any tax on your overseas income and capital gains. The main condition to this is that you need to keep the income or proceeds outside of the UK. As you'd expect though there are ways around this to enable some of the proceeds and income to be brought into the UK free of taxes.

Make the most of your spouses offshore status.
If you're lucky enough to have a husband or wife that is either non UK resident or non UK domiciled you can use their offshore status to your advantage. This is what Philip Green did (the billionaire owner of BHS). His wife is a resident of Monaco and he ensured that she extracted dividends from his UK companies free of UK (and overseas) tax. This saved him paying UK tax of around £200Million that he would have otherwise had to pay if he'd extracted the dividends.

Using a tax efficient holding company.
Famous bands such as U2 and the Rolling stones make use of some of the best offshore tax companies to avoid paying tax on much of their income. U2 for example used to fall within the Irish tax regime which had a longstanding tax exemption for artists. When this loophole was tightened up, they moved their holding company to the Netherlands to take advantage of tax free royalties. There are lots of other countries that can also offer tax efficient holding companies such as Spain, Denmark and Cyprus.

Using tax efficient trading companies.
Multinationals such as Coca Cola make good use of a string of offshore companies to ensure that they can redistribute profits within the group to reduce the overall 'effective' rate of corporation tax. (It is reducing this effective rate that is the main focus of many in house tax lawyers lives!)
Actually move overseas Celebrities such as James Blunt, Michael Schumacher and Boris Becker have all moved offshore to ensure they have only limited UK tax obligations. They've based themselves in Switzerland and are local residents. The beauty of Switzerland is the 'fiscal deal' which allows the tax liability to be fixed at an artificially low amount.
So there you have it – some ideas to get you thinking about how you could use the offshore tax planning techniques of the rich and famous. For more detailed articles on offshore tax

Death And Taxes

“In this world nothing can be said to be certain, except death and taxes”
Benjamin Franklin

I, like many other good citizens from this great country of ours, left it to the very last moment to mail off this year’s tax return. As I entered the local post office and saw the long line, I once again promised myself that next year would be different. I really would make the effort to get them off before the last minute rush.

As I moved slowly towards the front of the line, I began wondering, in this day and age is this really the best system our great and wonderful leaders can come up with. After all, we now live in a world that allows a satellite miles above us to read a number plate. We can get the worldwide web on our cell phone, download TV programs that we may have missed or just want to save onto our iPods.

The original tax laws introduced in 1913 were a very simple affair. They began with tax brackets ranging from 1 to 7 percent - a far cry from today’s levels. The IRS tax codes, regulations and guidelines now have well over 9 million words. No wonder there's so much confusion. Is there truly anyone who really understands this monster. Let’s put this into some form of prospective. The Declaration of Independence has a little more than 1300 words. The Constitution which has served us well for more than 200 years comes in around 5000 words and the Holy Bible makes do with less than 800,000 words.

The Office of Management & Budget estimated in 2004 that we as a nation spent over $200 billion on compliance cost. At a time when the nations manufacturing industries, the foundation of any good economy, are all struggling against cheaper imports, shouldn’t our leaders be using that money to create “Jobs” for their citizens. Most experts agree that $200 billion would create well over 3 million jobs, which of course creates sales of consumable goods which creates more jobs and sales taxes.

From the moment we wake up in the morning we are being hit by taxes. Everyone is at it -- turn on the light (electricity taxes), run the shower (utility taxes) and my personal favorite the telephone taxes, all 6 million of them, or that's what it seems to me every time I receive a telephone bill.

Has the time come for a simple Flat Rate Tax, something we can ALL understand. There are many countries all over the world who have used this simple to understand and cost effective way of collecting taxes to revitalize their economies. Let's just imagine for a moment what it would be like if we could complete our tax returns on one simple piece of paper. A Flat Rate Tax for individuals and a Flat Rate Tax for businesses.  The same rules apply to all regardless of size of income. We all pay the same rate. Most of the successful countries have levied Flat Rate Taxes of less than 17%, with a stating level that protects the lower income groups. Could life ever be that simple again?  Would our Leaders really want us to understand what they were up to? And then there's those lobbyist.